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Tuesday, 7 August 2001
Page: 29309


Mr FITZGIBBON (4:14 PM) —I acknowledge the presence in the chamber of the new member for Aston and welcome him to the House of Representatives. It is a great shame that it was not a Queensland seat that he secured very recently, because, given the performance of the Minister for Small Business today and the revelations contained within his leaked document, there might be a vacancy on the government front bench in the not-too-distant future. Of course, as a Victorian, he misses out. The Minister for Small Business is in denial. He claims before the House that there have been no small business casualties as a result of the goods and services tax.



Mr FITZGIBBON —The member for Lowe, by way of interjection, points out that the minister is very good at quoting selectively. He quotes the things that he sees as good things in the Australian, but he omits to identify numerous stories, including some in the Sydney Morning Herald, that say that small businesses on Burwood Road, in the member for Lowe's constituency, are in crisis as a result of the GST. The cabinet submission that fell into the hands of the opposition today or last night highlights a number of key points. The first is that the government has run up the white flag with respect to GST simplification. Nowhere in the minister's submission will you find a proposal designed to address the complexity and compliance issues associated with the GST. Having finally acknowledged the difficulty that the new tax has posed for the small business community, the minister now tells us that his plan for small business is to do absolutely nothing. Let me remind the House once again what the minister had to say about the impact of the GST on small business in February this year. He said:

I'm not sure how many small businesses ... went out of business because of it—

that is, the BAS and the GST; he told us earlier that there would be no insolvencies as a result of the GST in the small business community—

but I certainly know that marriages were strained, small business were taken away from ... running their small business ... It was an unwelcome imposition.

That is what the Minister for Small Business had to say about the GST and the BAS earlier this year soon after his appointment. You could not get a stronger recognition of the impact of the GST on the small business community than that, yet in his submission he proposes to do absolutely nothing. But I suppose we should not be all that surprised that he intends to do nothing. In more recent times, including during question time and again on the MPI this afternoon, the Minister for Small Business has told us that all is rosy with respect to the GST and the small business community. The question has to be asked: how is it that the minister could so quickly go from doom and gloom to saying that everything is rosy? How could he say one month that this tax has been a terrible imposition and is crucifying small firms, straining marriages and forcing small business to the wall, and then suddenly say that the world is rosy?

I have a theory on that question. My theory is this: when the Prime Minister appointed the member for Groom as Minister for Small Business, he had a very narrow brief in mind. That brief was to go out and consult widely in the small business community. The Minister for Small Business likes to boast about how many miles he travelled throughout the first few months of his new appointment. The Prime Minister wanted him to be a sounding-board. But what the Minister for Small Business did not understand was that the Prime Minister expected him to do nothing about it. He was not proposing change. He did not want him to go out and consult, like Labor has been doing, to determine how they might help the small business constituency; he just wanted him to take the whacks of the small business community but not to promise anything. That is why he went down the path of mea culpa, mistakenly believing that he had the support of his Prime Minister and that changes would be proposed. The leaked submission today reflects the fact that the Prime Minister never had any intention that there should be further change to the GST, despite the fact that the Minister for Small Business has now acknowledged the pain, and indeed the Prime Minister was dragged screaming to acknowledge it.

But let us reflect for a moment on what the government promised the small business community prior to the last federal election. It said that it would reduce red tape by 50 per cent. What a joke that is amongst the small business community. The government cannot possibly claim to have reduced red tape at all. Indeed, its only possible claim is that it has managed to increase government regulation and red tape as a result of the GST. It said that the GST would be good for small business cash flow. The minister stood at the dispatch box at question time earlier this year and told us that he was talking to one small business operator who had paid off his Telstra shares with the money he collected as part of the GST process. Doesn't that reflect a total misunderstanding on the minister's part of the way the system operates? How reckless is it to send the message to the small business community that they can take those collections and spend them on shares, the market or whatever, rather than withhold them for remittance to the tax office. The fact is that cash flow has tightened for small business as larger firms slow down their payments to their small business supplier as a means of again relieving the impact of the GST on themselves.

The government said that the GST would be good for profitability, yet it has slowed the economy and it has forced small business to absorb the price impact of the GST. The Minister for Small Business made reference to retail figures today. In the recent slight rise in retail figures all commentators have identified that small business is now taking the opportunity to start to pass on some of that GST impact on their firms. For 12 months, it has been identified quite clearly that they have had no choice but to absorb the GST impact. Why is that? There are two reasons. One is that they are simply not competitive enough against larger firms to do otherwise. Of course, Minister Hockey was in here day in and day out waving the $10 million fine in their faces, so they were very fearful of passing on too much and therefore absorbed it.

I noted that when the CEO of Telstra announced recently the revised profit forecast for that company, he identified the decline in the profitability of their small business customers as one of the reasons for that forecast downturn. So the CEO of Telstra has identified the impact of the GST on small business. In respect of profitability, it is a well-known fact that large purchasers force the GST impact down the chain to their suppliers. The claims that the GST was going to be good for profitability are just farcical.

The second key point made in the leaked submission is that the Howard government has totally exited the area of small business policy over the last four years. In other words, the government has been distracted by the GST and has talked about and dealt with nothing else in four years. The minister has identified a number of issues for small business in his submission, including the barrier small businesses face when trying to access government tender contracts. The question has to be asked: having identified this problem, why did it take an election year—why did it have to come so close to an election for the government to identify this problem? More importantly, does the government intend to act on these issues? The minister was given three opportunities in the House today to respond to those questions on purchasing, tender and supply and he denied himself that opportunity on three occasions.

The third key point emanating from the leaked submission is the fact that the Minister for Small Business has issued a plea for help on behalf of the small business community. He has called on the Prime Minister to help what he claims is his traditional constituency, but the Prime Minister has made it quite clear that he has no intention whatsoever to move on the very large issues surrounding the GST and the way in which they impact on the small business sector.

The Minister for Small Business likes to think that the roll-back is going to be bad for small business. I have news for him: he is going to get a big surprise. (Time expired)